The story of Zopa: The fintech firm taking on the big banks

February 5, 2019

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Zopa is not a brand that many people have heard of. Its awareness among the British public sits at just 15%, according to YouGov BrandIndex – the big banks it wants to compete with score in the 90s.

And while it has leant £4bn to almost half a million people since it was founded in 2005, that is small fry compared to the financial sector’s major players.

When it launched, the company had the ambition to be the ‘eBay for money’ and so it created the first peer-to-peer lending platform. The idea was that the platform would connect borrowers with investors, offering the borrowers lower interest rates and fees than the banks, and investors a higher return on low-risk investing.

It was also one of the first movers in the so-called sharing economy. Before the rise of Airbnb or Just Eat or Rightmove, it was acting as a marketplace between the customer (the borrower) and the service provider (the investor). Yet as the sharing economy has gone from strength to strength, P2P lending has struggled to have the same impact.

Zopa has been profitable at various points but has had to balance profitability with investing for growth. The lending business had a surplus of £1.5m in 2017, according to The Times, but investment pushed the overall company to a loss of £4.2m.

That investment has mostly gone into its plans to launch into the banking sector. That might seem anathema to a company set up to offer consumers an alternative to the banks but is part of plans to widen the appeal of Zopa and, hopefully, propel it to profitability.

Yet a company with a bigger ambition also needs a bigger team. And so last year Zopa made three heavyweight hires. The first two were for a new CFO and chief risk officer and the last was for its first board-level marketer, with chief customer office Clare Gambardella joining from Virgin Active.

Gambardella admits she didn’t envision moving into the financial services industry. While she has worked across sectors – including in FMCG at Procter & Gamble and in the leisure space – she admits Zopa was “quite far from what I’d done before”. But she says the “progressive” role of chief customer officer, the chance to work in a new sector and the opportunity with the Zopa brand convinced her to join.

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“The brand is a real diamond in the rough,” she explains. “It had these great stories about the way it had treated customers, the things it had done differently on behalf of customers, but you really had to dig around to find them.

“It has been walking the walk for a long time but not made those stories public or put the brand on top of those stories to the extent it should.”

Polishing the brand

Polishing that diamond is Gambardella’s main role. She thinks Zopa has a “clear and simple proposition” and a promise around “fairness and value” but that as it runs both a bank and a lending platform it will need to be clearer in its points of differentiation and louder about the value it can offer.

“We are going to be in a situation where we have more products and therefore the offering is broader and we’re in a much broader competitive set,” she says.

“The challenge for me was how do we go about figuring out what the brand stands for in this new world in a way that is coherent, that is important to customers, and then how do we bring that to life.”

The brand is a real diamond in the rough. It had these great stories about the way it had treated customers, the things it had done differently on behalf of customers, but you really had to dig around to find them.

Clare Gambardella, Zopa

That work has led to launch of its brand positioning ‘The FeelGood Money company’. It aims to tackle what Gambardella calls the “chronic lack of trust” consumers have around money – both in terms of banks’ perceived ability to act in consumers’ best interests but also many people’s lack of personal confidence in finance.

“Whether you have money and you’re worried about it being invested in the right place or you don’t have money and you’re worried about needing to borrow, this anxiety around ‘have I got the right product and the right money in the right place’ is fairly common,” she explains.

Zopa wants to turn that on its head and get people feeling good about their money – from feeling like they have made the right decision and got the right product to offering good customer service. “That’s where FeelGood Money starts to make a huge amount of sense to us as a brand positioning that encompasses all our differentiators,” she adds.

Launching a brand position

The launch of FeelGood Money was done to coincide with the announcement about Zopa’s bank licence but establishing it as a brand position for the company is a longer job. The aim is to raise awareness of the Zopa brand, and raise awareness and consideration of its products.

According to YouGov BrandIndex, Zopa currently has a consideration score of just 1.1. In comparison Visa and Mastercard have consideration scores in the 30s. That might seem an unfair comparison but Zopa will soon be in competition with these firms with plans to launch its own savings account in the spring, followed by credit cards and personal loans.

There are plenty of other fintech firms looking to encroach on the big bank’s space. From Monzo to Starling, there is plenty of competition in this space. Gambardella believes Zopa will stand out because of its heritage, its focus on savings and loans (rather than current accounts) and its target demographic.

“We feel our product offering is quite unique in the market,” she adds. “And because of that difference in product and the heritage we have, our demographic target will end up being quite different as well.”

She is referring, of course, to the fact that the likes of Monzo tend to aim at younger consumers while Zopa’s audience is “really broad” and based more on behaviours than demographics. She describes Zopa’s audience as “demographically scattered” but typically comfortable using tech, engaged in current affairs and looking for better customer service.

“There has been a huge shift in consumer expectations overall and it’s fair to say the incumbent banking sector has been slow to meet those expectations or even acknowledge them,” she argues.

The ‘progressive’ role of marketing

In the CCO role, Gambardella has responsibility beyond marketing and communications, with the job also encompassing operations and HR. She believes that is key, particularly at a digital business where the brand and the customer experience are heavily linked.

“If you look at how predominantly digital businesses deliver their customer experience, it is heavily online and through their operational teams – through the decisions they make behind the scenes in terms of how they fulfil applications or requests. And it’s also to do with their customer service teams. Separating the brand and what you’re trying to do with that from the way you deal with people through operations is really difficult.”

Zopa also has a setup more typically found at tech companies. The ‘tribe’ model, which was pioneered by Spotify, means it has multifunctional teams orientated around delivering products, rather than disciplines working in silos.

For example, Zopa has an investor tribe responsible for the customer experience and P&L on the investor product. That team does everything from customer insight to product specification to building the product and includes developers, commercial, analysts, compliance and copywriters.

“What that does is take out a lot of the traditional dependencies and ensure the product really brings together lots of different disciplines,” explains Gambardella. “The full spectrum of product is owned [in one tribe].”

Brand sits outside the tribes as a central function, with Gambardella working with tribe leaders on how customer communications should look and what their shared objectives should be.

That central marketing team has been beefed up since Gambardella joined. In particular, the comms function has been expanded, so Zopa now has a creative director and a website lead, as well as social media research and support, and is hiring to bring more creative people to the tribes.

“[We want people] to think about content and communication inside the tribes on a product-by-product basis. It was about building out that team with a really clear remit to get us to bank launch and beyond, and build a name for Zopa in that place.”

To do that, Zopa will be focusing on its brand platform, hooking its communications into product events such as the launch of the savings account but also running more activity through the year so people come across the brand more often.

“We have to think about the drumbeat of activity that connects with our customers and helps them to understand what FeelGood Money can mean for them,” she concludes. “It’s about how we own that and make it real for customers and prospective customers.”

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